What Trademark Owners Can Learn from Counterfeit Wines

By: Suzan Hixon and Brittany Riley

We usually immediately think of designer purses, shoes, and electronics when talking about counterfeit goods. In the case of logos and brands, counterfeiting results in trademark infringement. However, the illegal imitation of products is expanding to food and drink.  Recently, a renowned wine dealer, Rudy Kurniawan, was arrested for auctioning 84 bottles of counterfeit wine purporting to be from Domaine Ponsot in Burgundy, France, which were expected to sell for approximately $600,000.  Prosecutors maintain that the wine was not authentic. Unfortunately for Mr. Kurniawan, the crime he is charged with is serious, as the bad-faith sale of any commodity that is known to be a counterfeit, fake or forgery is a felony.

Unfortunately, instances of “label fraud” are not new to the wine industry.  Label fraud is where counterfeit labels from cult wines and other rare and expensive wines are affixed to bottles of less expensive wine and then resold.  During the 1980s and 1990s, wine collector Hardy Rodenstock was infamous for selling fake “Jefferson bottles,” rare Bordeaux wines bottled for American President Thomas Jefferson.   

At the surface, counterfeit wines seem to only hurt the buyer; nevertheless, label fraud can have serious repercussions for the wine market as a whole. For instance, the presence of counterfeit wines in the market has the greatest potential to impact the wine industry in the areas of financial loss, damage to brand reputation, and liability. The potential cost to vintners has caused them to look to new technologies—from security inks to micro-chipped corks to laser-coded bottles—in order to protect their brands from fraud. Other producers have worked with printers to develop graphics or micro-printed multicolored codes that are only visible with magnification. Some vintners even use holograms or unique etchings on their bottles.

The expansion of fraud within the wine industry can serve as a lesson to all trademark owners.  Expanding technology will allow counterfeiters to copy almost any product, especially luxury and high-end products. Trademark owners who are worried that their product will be subject to counterfeit techniques can learn from the wine bottling and labeling industry by applying protective techniques to their own products.  The use of micro-chips, microprinted multicolored codes, and holograms can be applied to various products depending on the material and cost.  Although the methods used by vintners to protect their brands from fraud may seem expensive and excessive, it evidences how costly and damaging counterfeit products can be to the success of a brand and/or an entire industry.

Pinterest: Pinning it to the User?

By: Suzan Hixon and Brittany Riley

 

For years, women of all ages have spent countless hours creating collections of ideas in scrapbooks for outfits, future weddings and homes.  In the same way that email and Facebook virtually eliminated handwritten letters, scrapbooking in its tangible form is surely dwindling with the creation of the social media site, Pinterest.

Pinterest is an internet based pin-board site where users “pin” their favorite recipes, books, clothes, photos, and quotes on customized “pinboards” for other “pinners” to follow.  According to VentureBeat (www.venturebeat.com), Pinterest has become one of the top trafficked social network sites online.  However, success is not always sweet.

Pinterest’s increasing popularity creates significant issues in terms of piracy and copyright law. Many Pinterest users post photographs on their pinboards without ownership of the copyright to the image. Thus, questions arise as to the potential for copyright infringement. Unsuspecting pinners use bookmarklet to pin as they browse the web. When they see an image they want to pin, the pinner simply clicks “Pin It” on their browser, designates the board to be pinned, and the image is “magically” transferred it to the designated pinboard.  The process is seemingly innocent and all-too easy, but the consequences can be dire.

Pinterest warns users in the Copyright and Trademark section of their site that pinners may receive a notification that a pin has been removed due to a copyright complaint if the content’s owner makes a complaint. Those users who receive numerous copyright complaints can lose their ability to pin new images or, even worse, have their account terminated. Loss of one’s account or pinning capabilities is an insignificant consequence compared to the legal and financial ramifications that users could suffer.

Without the permission of the copyright owner, pinners are arguably infringing images. Pinterest has provided some relief for disgruntled copyright owners through offering a small piece of code that can be added to the head of any page of a website to prevent images from being pinned. However, Pinterest offers no protection for its users. Pinterest is truly pinning it to the user. Pinterest’s Terms of Use section reveals users are solely responsible for what they pin and re-pin.  Users must have explicit permission from the owner of the image to post anything. Furthermore, the section reveals that users agree to bear the entire risk “TO THE MAXIMUM EXTENT PERMITTED BY LAW” arising out of use of the site. Users are responsible for paying for their own lawyer and for Pinterest’s lawyer when litigation ensues. They are also saddled with an indemnification clause, which means that users (now defendants) must pay all charges against themselves and Pinterest.

Whether or not copyright owners will assert claims for infringement is yet to be seen.  It could be argued that Pinterest increases website traffic and sales for owners, but not all copyright owners are retail businesses. Like the defendants in suits associated with Napster, many users are unsuspecting, well-meaning people with little or no legal knowledge.  In fact, attorneys and law students alike failed to read the “fine print” when creating their Pinterest account.  Now users must decide whether to take a risk and continue to discover and share their favorite images, only pin and re-pin images they own or have permission to use, or delete their account altogether.

If you decide to keep your Pinterest account, be “copyright friendly” and protect yourself by pinning the original source. By ensuring that the image you are pinning goes back to its original site you can help protect yourself from infringement claims.  Also, give the original site credit for the image. See http://www.graphicsfairy-crafts.com/2012/03/how-to-find-original-source-of-image-on.html for a great tutorial on how to find the original source of an image!

If you are the owner of an image, watermark your image. Pinterest does not currently permitting the cropping of images; therefore, you should always receive credit as the original owner.  If you do not wish for your image to be on Pinterest at all, take advantage of the code that Pinterest offers that can be added to the head of any page of a website to prevent images from being pinned.

Website Audits: Protecting Intellectual Property in Cyberspace – Part III

My last post discussed the use of third party copyrights, and privacy rights.  Today, I’ll briefly discuss publicity rights, and linking.

Rights of Publicity

The courts of the U.S. and some other jurisdictions have recognized “rights of publicity,” which is a form of invasion of privacy.   These rights usually apply to all living persons and, depending on the state statute, deceased individuals.  The “right of publicity” prohibits the use of the “likeness” of others for commercial purposes, without first obtaining their consent. Likeness includes appearance, name, voice, and any other identifiable aspects of a personality.

Linking

“Linking” is the heart of the  Internet and has been around since its inception.  While mutually agreed linking agreements are becoming quite common, linking can have serious negative implications.  Obtain permission for certain kinds of linking rights to your sight to avoid linking in such a manner as to potentially infringe on the rights of the linked site’s owner, implying endorsements or affiliations from the linked site to yours when none exist, or in some other manner creating potential liability issues by virtue of the linking.  Particularly, avoid using links to another site in any way that suggests that your business is associated with the other site or that the information being provided by the other site is yours, unless you have the consent of the other website owner.  In turn, require other sites to request written permission to link to your site, so you can ensure that the links created are not “deep links”  (i.e., links that take visitors not to your home page, where you may have advertising and other important information displayed, but instead to other pages which can perhaps be one or more levels “below” the main homepage.)

My next postings regarding website audits will address how to avoid exposing your intellectual property to infringement by others.

 

Website Audits: Protecting Intellectual Property in Cyberspace – Part II

My last post discussed the importance of a website audit to help avoid infringement of the IP rights of others.  I briefly discussed selecting a domain name, and use of third party trademark on your website.  Today, hit on copyrights, and the rights of privacy and how they relate to your website.

Use of Third Party Copyrights

It may be a breach of copyright to take graphics, text, photos, music, etc., from another site and place it on your own website without the prior consent of the author.  Typically, you already own the content created by your company and its employees.  For materials you are already using “with permission,” review the existing licenses, which often restrict the type of media and the territory in which you can use the media.  For new known third party content, be sure to obtain a license to cover your proposed uses, or better yet, obtain an assignment of ownership rights in the content.  Particularly, if the third party is not your employee, you must have a valid written work-made-for-hire agreement or some other form of written agreement transferring to you all the rights in the materials.  If you obtain material from a third party and you do not have a valid work-made-for-hire agreement, you will need to get a license to use the content.  And, for unknown third party content (i.e., you are  not really sure where the content originated), get indemnity from the supplier of that content so that you can try to insulate yourself from possible negative legal ramifications.

Rights of Privacy

The Internet has made access to information easier, including access to personal information.  There is no comprehensive privacy protection legislation in the U.S. that address the collection, storage, transmission or use of personal information on or from the Internet.  Typically, in the U.S., the response has been to enact laws to target specific privacy-related issues as new technologies develop and new issues arise (e.g., Cable Communications Policy Act, the Children’s Online Privacy Protection Act, and, arguably, the USA Patriot Act.)

The European Union, however, enacted the EU Directive on the Protection of Personal Data in 1995 to harmonize privacy protection laws of the EU Member States.  The EU does not consider US laws to provide adequate protection of personal data, and generally personal data may not be transferred from the EU to the US, unless the US company signs a contract to provide adequate protection for the personal data.  Given the U.S.’s lack of a comprehensive privacy law, self-regulation plays an important role in the U.S. for the protection of privacy online.  Although the industry is motivated to self-regulate because of the fears of overly burdensome government imposed laws, self-regulation may leave open the question of whether the privacy of Internet users is actually being maintained.

My next post will discuss the rights of publicity, and linking within websites.

Website Audits: Protecting Intellectual Property in Cyberspace – Part I

Consider the following questions:  Are you considering a website for your business? Does your business already have its own website?  If you answered ‘yes’ to either question, and chances are you did (!), have you addressed the intellectual property issues  associated with having a website?

When you finally take the leap into cyberspace, and chances are, you will(!), a thorough website audit can be a crucial tool to help avoid any unpleasant legal ramifications.  By examining your website, and all agreements associated with the website, you may be in a position to avoid two main types of risk: infringing the intellectual property rights of others, and exposing your intellectual property to infringement by others.  My next series of blog posts are intended to be a non-exhaustive discussion of just a few of the many intellectual property issues to consider when performing a website audit.  Of course, pay particular attention to the laws in your home country and the location of your website’s target audience.

Avoiding Infringement of the Intellectual Property Rights of Others

As a website owner, you have the obligation to proactively take steps to avoid infringement of the intellectual property rights of others.

Selecting a Domain Name

Consider whether the domain name of your website  infringes the trademark rights of others.  “Cybersquatting” is prohibited in the U.S. under the Anticybersquatting Consumer Protection Act (15 U.S.C. §1125(d)). This act prohibits registration and use of domain names in bad faith and trafficking in domain names While domain names are often considered merely electronic addresses, trademarks are often used as domain names.  A trademark search will likely reveal any existing trademarks that are likely to cause confusion with your domain name.

Use of Third Party Trademarks

One of the areas of potential trademark infringement that is peculiar to the Internet is the use of trademarks within the body of the “meta tag” section of the source code of a website.  A meta tag includes keywords used by search engines to locate websites.  Thus, the manner in which such keywords are created and used in the meta tag section can often determine whether your website is “found” on the Internet during an Internet search.  Do not use other’s trademarks as keywords in the meta tag unless you have been given permission by the trademark owner to do so.  In other words, do not bury other business or product names that are protected by trademark law in your meta tags to increase the traffic to your website, unless you have the consent of the trademark owner.  Note, U.S. courts have held that the use of federally registered trademarks in the keywords is an unauthorized use of the registered trademark, and thus an infringement.  Furthermore, when reviewing the contract between the web designer and the website owner, you should consider provisions which place responsibility for the designation and placement of keywords and meta tags, which should be covered by the express terms of the written agreement.

Also, avoid using trademarks and logos of other companies on your website without first obtaining permission from the owner, as this may give the false impression that the owner is affiliated with or endorses your company.  However, you may use trademarks of other companies in proper comparative advertising.  Keep in mind that such “fair use” must be limited to taking only that which is necessary, so use of logos is usually not permitted without consent.

That’s all for today.  My next posting will talk about use of third party copyrights and privacy rights!

Are Your Ads Guilty of “Greenwashing”

While marketing your company as “green” has amazing benefits, be wary of misrepresenting your “greenness” (i.e., “greenwashing”), which can damage your credibility and make you susceptible to legal claims for false advertising.

Think it can’t happen to you? Cases in pointe:

ConAgra, a food products company, has faced a lawsuit for labeling its cooking oils as “natural” even though they are made with genetically modified ingredients. Ouch.

Sigg, the maker of the Swiss-based reusable bottle, once touted to its customers that its products were BPA-free, even though the bottles contained the chemical in their liner.  After this became public, sales dropped.  No word on whether they will be facing any legal liability for false advertising.

Unfortunately, “greenwashing” may just be getting worse.  The Greenwashing Report from TerraChoice Group, an environmental marketing agency, has stated that more than 95% of all consumer products claiming to be green were found to commit at least one of the “seven sins of greenwashing”, which include not providing evidence (or a basis of their claims), being vague, or, yikes, flat-out lying.

So, how can you avoid greenwashing in your company’s advertising? First, keep your messages consistent and support every claim with incontrovertible evidence.  Make sure you are able to back up each claim of “eco-friendly”, “99% recyclable”, etc.  Next, be transparent and honest if your claims are called into question.  Third, if you have any questions about what claims you may be able to make, seek out advice from an advertising attorney.